Aid groups now using the same data technology as bitcoin

In the Za’atari refugee camp in Jordan, Amar Al-Eid heads toward the checkout of the food distribution store carrying supplies for his two children. The shopkeeper raises a black box to his face and scans the Syrian refugee’s iris. The transaction goes through and a day’s rations are secured.

The data technology that underpins virtual currencies like Bitcoin is now also used to deliver aid more efficiently by dramatically lowering the risk of bribes and fraud by local officials — a huge, longstanding problem in the industry. The so-called blockchain keeps a record of all transactions and buyers, making sure recipients like Al-Eid get their goods without the added costs of graft or bank transfer fees. And donors can track the use of their aid money, all the way to the refugee family it helps survive.

“It’s a very easy process and it doesn’t have any complications,” says Al-Eid, before taking the food off to his family.

The UN’s World Food Programme has been testing the use of blockchain technology since 2017 to manage aid for over 100,000 refugees in camps in Jordan, which hosts over 740,000 people from neighboring countries like war-torn Syria. It aims to extend it to 500,000 refugees by the end of March. Other international organizations, including the World Bank, UNICEF and the Red Cross, are looking at ways to implement blockchain into their own projects.

Blockchain is an online ledger of transactions spread across a global network of computers that use their processing power to verify any changes. It is most famous for being used to support virtual currencies like Bitcoin, but can in practice be used to track any system of payments or data transfers. In the refugee aid system it is testing, the UN does not use virtual currencies but dollars. The blockchain technology helps it know where every cent is, from the moment it is donated to when it is spent on a physical good.

And that can mean huge savings.

Former UN Secretary General Ban Ki Moon has said that in 2011, some 30 percent of aid donations – around $40 billion, according to one estimate – failed to reach intended recipients because middlemen skimmed some off of top and corrupt officials often took a cut.

Ultimately, the system helps those who receive the money by making more of it available and reduces the concern among donors that their money will actually be used for the intended purpose.

“We have this rapid ability to understand where our money is throughout the process,” says Gustav Stromfelt, one of the project managers working on the WFP’s program. “It improves the transparency, accountability, and communication across the board.”

Because the data is spread across so many computers, a thief would have to take control of the entire network — potentially thousands of terminals — to fudge the numbers and make off with the money. That would require an enormous amount of computing power, so it wouldn’t be profitable.

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